“Discussions are being pursued with several of these third parties in order to generate value-enhancing alternatives,” Potash Corp. said today in a statement. China’s Sinochem Group and Brazil’s Vale SA made initial inquiries with Potash Corp.’s board late last week about the possibility of holding talks, a person with knowledge of the matter said, declining to be identified because the information isn’t public.

Any bidder would go up against Melbourne-based BHP, whose offer was unanimously rejected by Potash Corp.’s board. The Australian company took its bid to shareholders last week after Potash Corp. rebuffed an initial approach. State-owned Sinochem’s interest would indicate China’s desire to stop BHP from controlling more supplies to the world’s biggest consumer of commodities after years of price tensions over iron ore.

“Clearly, if the Chinese government wants to get behind Sinochem, then they can blow BHP out of the water,” Philip Keevil, a senior partner at Compass Advisers LLP, told Maryam Nemazee today on Bloomberg Television’s The Pulse.

Shares Gain

BHP, the world’s biggest mining company, rose as much as 2.2 percent to 1,861.5 pence in London trading, and was at 1,856 pence as of 2:25 p.m. local time. BHP offered $130 a share for Saskatoon, Saskatchewan-based Potash Corp., the world’s largest fertilizer producer, which today traded up 1.5 percent at C$158.93 ($151.64) in Toronto.

“We are closely watching BHP Billiton’s bid for Potash Corp.,” Li Qiang, head of the president’s office at Sinochem, said by phone from Beijing. “This is big news for the industry and it’s only natural that everyone is looking at it. I cannot verify that Sinochem and Potash have been in any form of contact.” Sinochem is China’s biggest chemicals and fertilizer trader.

Vale, the world’s biggest iron ore exporter, doesn’t comment on “market speculation,” a spokesperson said today, declining to be identified because of company policy. Bill Johnson, a spokesman for Potash, declined to comment. Kelly Quirke, a spokeswoman at BHP, also declined to comment.

Growing Chinese Demand

China is seeking to control more commodities after its companies last year spent more than $30 billion, a record amount, buying oilfields and mines. The biggest consumer of rice, wheat and soybeans needs more productive farmlands as it wants to supply food for 22 percent of the world’s population using less than 10 percent of the globe’s arable land.

“The growth of China’s potash demand in the long run will exceed the expansion of its own production,” said Xu Hongzhi, an analyst at Beijing Orient Agribusiness Consultant Co. “China has tried to invest in potash mines in other countries but the record doesn’t show much success.”

Potash is a form of potassium mined in Canada, Brazil, Germany and the U.S., and used to help boost crop yields by improving the ability of plants to withstand dry soil.

China, the second-biggest importer of potash after India, is the largest user of potassium fertilizer and relies on overseas supply for more than half of its needs. Sinochem Group is listed as a key state-owned company under the nation’s Assets Supervision and Administration Commission of the State Council.

Sinochem Earnings

The group, incorporated in 1950, posted a record gross profit of 8.7 billion yuan ($1.3 billion) in 2008 on sales of 300 billion yuan, according to the latest information on its website. Sinochem’s attempt to buy Nufarm Ltd. last year was stymied when Japan’s Sumitomo Chemical Co. bought a 20 percent stake in Australia’s largest farm chemicals supplier.

“It’s unrealistic for Sinochem to make a counter bid for Potash Corp. because the cost would be too high,” said Shi Ming, a Shanghai-based analyst with Shenyin Wanguo Securities Co. “China is expanding its own potash capacity to cut its dependence on imports.”

Output from Chinese mines may increase to 7 million metric tons by 2015 from 4.5 million tons, Shi said.

A group led by Chinese private-equity fund Hopu Investment Management Co. is also studying a possible bid for Potash Corp., the Wall Street Journal reported today, citing a person familiar with the matter. The group comprises investors from Canada, the U.S. and Asia, and includes at least two sovereign wealth funds, the newspaper said.

Guy Cui, a managing director at Hopu, couldn’t be reached for comment when Bloomberg News called his mobile phone.

Vale Acquisitions

Vale has agreed to purchase assets including phosphate mines from Bunge Ltd. for $3.8 billion to help meet demand for crop nutrients in South America. The Rio de Janeiro-based company in April also received an initial environmental license for a potash mine project in Brazil’s Sergipe state.

The Carnalita project is set to be the biggest potash mine in Brazil when it begins operating, Vale said April 13. It may also build a potash plant to start up in 2014 with initial output of 1.2 million tons a year.

Potash Corp.’s board met in July to review the possibility of an unsolicited approach by BHP, the Canadian company said in today’s statement. The board had held a meeting each July for “a number of years” to study “legal and other developments relating to merger and acquisition activity,” it said.

Chinese Suitors

BHP Chief Executive Officer Marius Kloppers met Potash Corp. CEO Bill Doyle on Aug. 12 in Chicago to present BHP’s offer. In the following days, Potash Corp.’s board discussed Chinese companies as possible suitors, people with direct knowledge of the talks said last week. Advisers told the board that Chinese companies may move slowly in making a counteroffer, the people said.

“It’s credible that Sinochem are interested but view them as a relatively minor threat to BHP Billiton as they won’t be able to go for” the whole company, Liberum Capital Ltd. said today in a note. Canada is unlikely to want Chinese state control of Potash Corp. and “a minority stake at a premium will require some very big off-take/joint venture concessions, which may impinge long term value,” it said.